The Goldman Sachs Group, Inc. (GS) Earnings Call Transcript & Summary

If we could just throw up the first ARS question that we've been asking in all the presentations, and we'll get started. But concluding day 1 of what I've been told has been a very successful 23rd Annual Global Financial Services Conference. Very pleased to have Goldman Sachs Chairman and CEO, David Solomon, with us. Again, last year, h was in this exact same time slot and it worked very well. So we thought we'd try it again.

Great.

So David, thank you for being here. Dave is about to embark on his eighth year of CEO at Goldman. And maybe the best place to begin is since we spoke last year, definitely have made progress on the strategy. Stock has outperformed since then, so appreciated by investors. And maybe just share your perspectives on strategy and what's been accomplished over the years.

Sure. Well, good afternoon, everybody. And Jason, thank you for having me. And when do I get to see the answer to that question?

There's in the middle of the table. I think once we get a quorum of people to respond. There we go.

I want somebody to tell me the underweight short story. Look, we've made -- Jason, you and I were just talking in the back. We've made a lot of progress over the last 7 years. We had a very conscious strategy to grow the firm, to grow the franchise. And when you step back and look at what we've done, we've really enhanced the client centricity of the firm, really evolved this one Goldman Sachs operating ethos, which is penetrating the firm and has really helped us improve our client market shares across the board. If you look at our core business in Banking and Markets, we've improved our wallet share by about 370 basis points. We've taken the revenues of the firm from mid-30s, high 30s to $54 billion, $55 billion last year. We've significantly grown our assets under management. We've taken our assets under management from 2019 up by about 77%. We've meaningfully increased durable revenue. And the result of that is we've created a more stable firm. We've created a more durable firm, and we've also grown the firm and the firm's earnings meaningfully, and that's responded in a larger market cap and improved uplifted returns. And I think the market is getting more and more confidence in their durability. And of course, there are going to be cycles in our business, our industry, but the durability of these businesses, and I think one of the interesting things that's going on is that the market is starting to appreciate that these large financial institutions have become much broader, much more diverse, much more durable, and with a market multiple for the market of 22.5, they probably deserve a better multiple than they've had, and those multiples are improving, and we're participating in that. But our relative performance, I think, has been quite strong.

We just throw up the next ARS question. But David, let me ask you in terms of just forward strategy as you kind of look ahead the next few years, how would you characterize the opportunity set and your strategic priorities from here?

Well, one of the things that I like a lot is we've been in such a tough capital markets and M&A environment, and we're really now in the last couple of quarters, starting to see a real improvement and a real opening up of that. But I think there's a long way for that to run. The sponsor community has still been relatively quiet. We're seeing a real pickup in strategic M&A because I think large companies who really have been shut down for the last 4 or 5 years and believing that they could not do anything they wanted to do strategically, now actually believe they're an administration where they can dream big and do things that are significant. We've seen a massive pickup in that strategic M&A activity. And so I think we're going to have -- I can't tell you what the market is going to do, what the world is going to do, but I think from kind of a secular move, we're going to have more of a tailwind in terms of M&A and IPO and capital markets activity. And so I'm quite excited about that. I think broadly for the firm and our strategy to continue to execute, our strategy remains the same, Jason. You know what we're focused on. And we continue to think that we've got really good room to continue to, at the margin, improve our world-class Global Banking and Markets franchise, continue to focus on opportunities where there are share gains. There's not as much as what we've accomplished over the last 7 years, but there's still room for improvement. And in Asset & Wealth Management, we think we can continue to grow that franchise high single digits. We can continue to meaningfully uplift the returns over time in that franchise, and that will contribute to a higher overall return for the firm. And so we're making good progress there. On top of that, you obviously have a different regulatory environment that I think is creating a tailwind for all these institutions. I think there's still time to see how that plays through and how much of that is captured. But I think all those things set up very nicely for a good organic growth story that's in line with what we've done. And obviously, if there are opportunities that can accelerate our asset and wealth management strategy and kind of solidify the position of that franchise, we're going to think about them. We've obviously got capital to deploy. And so we're going to think carefully about them, but the bar will always be very, very high for us to do something in that context.

Okay. A lot in there. So maybe we'll -- we'll unpack some of that. But I guess maybe first on just the operating backdrop. You mentioned a massive pickup in M&A. You mentioned IPO activity and issuance in general. Maybe just talk a bit more about the operating backdrop, your views on the kind of the macro environment, obviously, talking to clients all the time. What's on their minds and just activity in general?

Well, broadly speaking, there's -- we're -- it's indirect. We're operating in an environment where I'd say there's a lot of noise. And I think one of the things we're trying to do is trying to pick apart what's noise and what's substantively changing or affecting the macro operating environment. I mean there are a few things that I'll point to that are having a big impact on the economic trajectory at the moment. One is the world and developed economies broadly are running pretty fiscally expansive plays, and the U.S. is no exception to that. And that fiscal expansion is a big tailwind for economic activity even when you throw things up that slow down growth. And my own view is if you look at economic growth in the United States today, it's chugging along pretty well, but it would probably be doing better if there was more certainty around trade policy. Trade policy has been a headwind to growth to some degree. And the uncertainty, I think, has slowed investment. And obviously, there's still uncertainty as how this all resolves, how it plays through, how we see it in the economy, but the fiscal stimulus has really kept the economy going quite well. I think regulatory relief across a number of industries, given where we were for the last 4 or 5 years, is also a tailwind for economic growth. Obviously, the constructive resolution of the tax bill and moving it forward is constructive. And so you've got a handful of constructive forces against some headwinds, some uncertainty. But the net-net of that is it's a pretty constructive economic environment. We are obviously seeing some softening in labor. There are a number of things that are contributing to that. I think one of the things we're going to have to wrestle with is immigration policy has slowed obviously materially people coming in. That's important when the economy is growing. And so that's something that we'll have to wrestle with over time. But it's a relatively constructive economic environment. And then also put on this whole technology push forward around AI, huge productivity gains for enterprises because of that. That's another tailwind. That's also generating a lot of economic activity, also creating a lot of hype, which we'll have to watch. And I think you've got to be very thoughtful and balanced on when you think about the overall direction of travel on this. But if you put it all together, it's a relatively constructive economic environment. I think there'll be some volatility in the next 6 to 12 months, but the direction of travel for activity, particularly in our business, I think, is going to be quite constructive.

This is the most constructive I've heard you sound in quite some time?

Well, I don't know about that. I think I've been pretty constructive for the last 6 to 12 months. But it was hard when you look at what was going on 2 years ago, it was hard to be super constructive about the overall environment. Now there are things going on now that I don't like also. But when you're talking about economic activity and clients being more active, this just seems like a better environment for the moment. But it's -- I'd also say it's interesting when you look at -- one of the things that's interesting to me, there's a lot of talk about the policy rate. And it just doesn't feel to me like the policy rate is extraordinarily restrictive at the moment when you look at risk appetite. And so risk appetite is definitely out on what I'd say is the more exuberant end of the spectrum. And that obviously creates activity, too.

Makes sense. Maybe spend a minute just unpacking the longer-term opportunity for global banking and markets. Obviously, you have leadership position in investment banking, FIC, equity trading and expanded wallet share. So I guess where do we go from here? I guess, specific areas or initiatives that you're prioritizing the longer term?

Sure. It's a big business. It's a big, diverse business. And we have, I think, a clear and undisputed leadership position in investment banking, and we have a top 2 position, let's say, in FIC and equities. The integration of it, I think we do very, very well, and it's a very, very powerful client franchise. Even though we've taken our client wallet shares up about 370 basis points over the last 5, 6 years, there are still opportunities to improve with individual clients. There are places where we underperform our overall wallet shares. And we're always constantly looking at that, taking that apart and saying, how can we add to the overall picture. Obviously, you don't have the same upside from a wallet share perspective that you have, but I think you can continue to do more and you can continue to put more financial resources forward to serve our clients and strengthen that position. With the regulatory push that's going on, that frees up more capital and RWAs. There's still uncertainty around how that's all going to come through, but the direction of travel is one that's quite constructive around that. And so when you think about that, that allows us more financial resources and improves returns in some of these businesses, and that creates a trajectory for some more upside and some more glide path. But we're very focused on places where we have gaps. We're very focused on our ability to close those gaps. And I do think that when you get the investment banking machine really turned on, it spills into our firm in a very pronounced way. And we really haven't seen that really since 2021. And it's improving, but we're still not in an environment where, for example, the sponsor community is still muted. It's improving, but still muted. See more strategic activity, but my guess is in the next 12 to 24 months, we'll continue to see that sponsor community unlock. There are $4 trillion of private equity companies kind of in play, a good year for monetization. This is off the top of my head, it's about $400 billion. So there's kind of 10 years of backlog of monetization and turnover based on the private equity investment that was put in place over the course of the last 5, 6 years.

Powerful.

Yes, very powerful.

Maybe expand a bit just on private credit. It's obviously been a hot topic. Earlier this year, you put out a press release forming this Capital Solutions group. One of the -- I wrote down one of the comments from that, but it was -- you described it as one of the most important structural trends taking place in finance. Maybe just talk to kind of what progress you've seen in this space so far and how does this initiative kind of play into your longer-term strategy?

Sure. Private credit, when you step back and you think about private credit as an asset class, it's still growing. And I think we're in the early innings of the ability for private capital formation and credit to continue to play a big, big role in the way businesses finance. And I do think, look, just to put things, when people talk about the private markets, just to put things in perspective. I was talking about private equity companies, when I said $4 trillion, we should remember that one company, NVIDIA is $4 trillion. So when you think about the public markets and the scale of the public markets and you think about what's going on in private capital formation, there's lots of room to continue to broaden and run and there's lots of capital out in the world, especially as access to these products become more accessible to wealth management systems and investors -- wealth investors broadly. And we've been a player in private credit for 30-plus years. We've got a scaled private credit platform. But the thing that I think uniquely positions the firm, which led us to form the Capital Solutions Group is there's a lot of capital in the world. What all the capital allocators and investors want is access to products and ideas and differentiated things that they can deploy that capital into. And what we were really trying to do with Capital Solutions Group because we sit in a very unique place, given the fact that we've got a large private credit platform, but we also have this very powerful investment bank and markets business, we're a great originator of product, a differentiated originator of product. And our ability to see what's going on in the world and turn that into opportunities for people to deploy capital, we think might be second to none. And so we're very, very focused on how we create a seamless capability to really drive differentiated origination. So you look at the last few weeks, I'd point to 2 things just off the top of my head that come to mind that are indicative of our ability to do this. We got a structured financing for Altice that was kind of a $1 billion financing. We did for air lease. We put together a $12 billion financing package that had $2 billion of structured equity in it and also a significant slug of private credit. We're very good at finding these opportunities to deploy significantly. We're in the middle of some very, very large infrastructure around AI infrastructure type financings that are tens of billions of dollars, and there's a lot of that coming. And so we sit in a very interesting place. We not only have capital to employ and we're a very, very significant lender through our private credit platform, but we see these things earlier. People come to us for advice on how best to structure them. And we're very, very important in [indiscernible] system. And through Capital Solutions, we're trying to ensure that we have very, very differentiated origination capability.

Got it. Maybe spend some time on Asset and Wealth Management. We've definitely seen growth in some of your more durable revenues. Margins have improved. I would suspect both are probably not where you want them to be, though. Just talk about maybe the growth strategy in that business and where you can take the margins and returns going forward.

Sure. I mean we've been -- we've laid this out pretty clearly. Long term, when you look at Asset and Wealth broadly, we say high single-digit growth rate in that business and that we set a target of 25% margins, but that's not our long-term aspiration. But we're pretty confident that we can, over time, in the medium term, drive these returns for this business above the mid-teens for sure. And we've grown it very nicely. I talked before about how the fact that since 2019, we've taken the assets under supervision up to $3.3 trillion, which is 77% growth. We've grown our management fees and our durable revenue during that period by 12%. And so we're performing that. We've raised $360 billion of alternatives over the course of the last 5 years. And so I just think we're very well positioned to continue that growth trajectory that we've laid out. And it's a little bit like investment in the ground, it takes time for it to ramp up. But it's in the ground. It's ramping up. The fee streams are coming online. We're continuing to raise capital. It continues to get deployed that continues to bring in more durable revenue, and I think that will continue. On the wealth management side, we've continued to make great progress there. I look at our private banking and lending business, which has been key to our growth in Wealth Management. Since 2019, we've taken that from about $1.5 billion. We've almost doubled it to just under $3 billion, $2.9 billion, and we see lots of growth. We're still underpenetrated as a lender into the wealth channel, the ultra-high net worth wealth channel. So we've got a very, very differentiated wealth franchise. We have about 17,000 clients, half of whom have been with the firm for more than 10 years. The average client size in terms of assets on our platform is $75 million, very differentiated from others. And when you look at the amount of wealth that's compounding in the world, we're just extremely well positioned in this ultra-high net worth marketplace. And we think there's a lot of growth and opportunity for us to continue to expand it.

And then maybe on kind of tease me up third-party wealth. I guess talk to some of the opportunities in that space. Obviously, I think we also saw the T. Rowe announcement from last week. Kind of just talk through that and give us some color on the opportunity.

Sure. I mean there's no -- we have a great manufacturing capability in our asset management business. We have some distribution, but there's lots of distribution that we haven't had access to. And our third-party wealth focus is a real opportunity for us to expand the access that others have to our very, very unique product set. And we've been working very hard at this and making very good progress broadly. The T. Rowe partnership represents a great opportunity for us to buy distribution into retirement channels with, I think, the premier retirement platform that's out there with a great brand and a great reputation. And so we're talking about a number of ways that our products can fit in target date funds that we can look at together, creating co-branded opportunities for investors around their retirement portfolios, how we give advice around retirement portfolios, how we can help people model retirement. And so this really gives us great partnership access to distribution that we haven't had before in this very important and I think evolving channel.

Just talking to investors after that, I guess, I think most thought the announcement kind of made sense from Goldman's perspective. I think some are a little surprised about the equity stake or buying equity in the Oakland market. Just your kind of thoughts around that.

Look, our partners wanted a commitment and alignment. We run a $1.8 trillion or $1.9 trillion balance sheet. We wanted to show support. What was interesting to me, this is about our partnering in retirement and in other areas to give investors access to some very, very unique products. The investment gives us some alignment, but it's interesting. If you were reading the press, the press made it look like the deal was the investment, okay? It's a small investment for Goldman Sachs. We're delighted to be partnering with a great firm. It's a small investment for Goldman Sachs.

No, I agree, I agree. I think we just -- we weren't used to seeing something like that. I guess on the alternative space, obviously, another key growth driver. Maybe just unpack your priorities and your competitive advantages here and just where you're seeing the most demand.

In alternatives?

Yes.

Yes, we're a scaled alternative player. We have just under $550 billion of alternatives. We've raised $360 billion, as I said, over the course of the last 5 years. We are on track to raise a comparable amount of money to what we raised last year. And so last year, we raised $79 billion, I think. Is that correct? $79 billion of alternatives last year. When you think about that, there aren't a lot of platforms in the world that can raise $79 billion of alternatives in a year. We are a very significant player. We have some franchises and alternatives that are really at scale, and we have others where we'd like to bring more scale to them. Example of that would be infrastructure. But when you think about credit, equity, when you look across equity and growth in private equity and other equity strategies, when you look at secondaries, we're a clear leader in secondaries. And so we're a very, very well-positioned alternatives franchise that will continue to grow as the alternatives industry grows. I think that when you think about alternatives broadly, we're still in the early innings of the secular growth of alternatives and the participation by investors in these products. That doesn't mean it will be a straight line. That doesn't mean there won't be -- it won't be without bumps. But I think we're still in the early innings of kind of alternative capital formation and access for a broader array of investors to these products, and we're trying to position the firm as well as we can to make sure we deliver on that.

Got it. Earlier, you mentioned just the regulatory backdrop and maybe we'll put up the next ARS question, but it's certainly something that's top of mind of investors, both the regulatory environment and capital and a lot of moving parts. But can you just kind of talk about the current state of play?

With respect to inorganic growth, we...

That's for the next question.

I'm sorry.

Regulation and cap.

Regulation and cap. So Regulation has been a real headwind for our industry over the last 5 or 6 years. It's clear that we're in a new regulatory environment, and we're going to see a shift. I think what's unclear is how this will all filter through, what will be more permanent and what will be more still caught in the political back and forth. But the trends are quite positive. They're quite positive around capital. They're quite positive around eSLR and leverage, and they're quite positive around supervision. And so when you look at all that, I think one of the things that's happened over the course, I mean, it's very interesting. You can go back and there's been a lot of talk about how the capital levels for the large banks have been about right. I mean you can go back 8 to 10 years and listen to that over and over again, yet the capital levels for the large banks have grown very materially. I'm not going to sit here and say they're going to reduce very materially. But when you think about the growth in these businesses, if we can stop the growth to some degree and have a capital regime that's clearly articulated so that people can plan multiple years at a time, that would be a huge improvement. I think as an industry, we've shown a lot of nimble flexibility around capital in an environment where capital is moving all over the place, a huge improvement that would allow more employment, more deployment into business, which is more productive for markets broadly would be a clearer capital regime. And I think there's a good chance we're going to get a much clearer capital regime. And I'm hopeful that some of what's been said and is representative will get put into place over the course of the coming months. I think they're pretty forward on eSLR relief, which is obviously capital relief and very, very significant because that had become binding to most of the firms. I think you're going to get a resolution on Basel III that will be quite constructive. And I do think that some of the headwinds around SCB, you've seen it in the last go round and the fact that there's -- the industry has kind of pushed back and there's going to have to be more transparency on how that's done and how that's modeled, I think that's quite constructive for capital levels. So we need to see it all come through, but I think that's a good opportunity. Now what does that do? That creates more excess capital. But I think one of the things that's important to note is everybody has been running with very large buffers because there's been so much uncertainty around how much capital you have to carry. And if you actually understand the capital regime, buffers can come down and that -- just that itself is a release of capital back into the system, which would be quite constructive. So I think we're heading to a more constructive environment, but we have to wait and see how this plays out. And on supervision, we've all put an enormous amount of time into this. There should be supervision. Banks need to be safe and sound, but the supervision should focus on the safety and soundness of institutions. And if it's not strain the way it was straining for the last 5 years, that frees up a lot of resources for us to invest in other things like client service and growth of our business. And I think we're definitely heading in that.

We actually had the Controller of the Currency, Jonathan Gould this morning, and he actually shared that exact same view in very similar termality. So obviously, your SCB came down a lot this year. You mentioned SLR proposal out there. G-SIB surcharge, I guess, has been another kind of headwind and kind of increasing constraint over the last few years. Any kind of thoughts in terms of...

Well, G-SIB I didn't mention G-SIB. G-SIB is another place where I think you're going to get relief. I mean, a minimum when the statute was put in place, the statute was supposed to be calibrated to economic growth in the world, and they just didn't implement it. Really, we should -- it should be backdated for 10 years for all the economic growth in the world. I'm not suggesting that's going to happen. But by the way, it would be a good thing if it was just calibrated going forward because that certainly would help. But look, it's all a cocktail. And I think the most important thing is consistency and understanding of the capital levels so that people can be thoughtful about their buffers and people can plan. And when people plan, they invest in their business, they grow their business, that's more constructive.

So I guess on that point, in this world, hopefully not too far away, just more ability to kind of plan on capital deployment. I guess, from an organic perspective, maybe talk about the biggest opportunities. And then I obviously going to have to follow up and ask you about inorganic.

Our capital policy remains pretty consistent. First and foremost, we're looking to deploy capital that we have into our business for incremental returns, and that has not changed. So there are certainly -- we see opportunities to deploy capital in the business, and we're focused on that. Financing, lending, some of the things we've talked about are clear examples of our ability to deploy more into the business. We're also in an environment where depending on how what's been put forward plays out, it frees up more RWA capacity and capital capacity for us to deploy. And some of the things that we can deploy and look more attractive than they might have looked in a different capital regime. First and foremost, we want to put resources forward to serve our clients and our franchise if the returns are reasonable, and we see opportunities for that this year, next year and in the future. That's first. Second, if we don't do that, we're going to continue to find ways to return capital to shareholders. We've grown our dividend very materially over the course of the last 7 years. We're very committed to that. And so we'll grow our dividend. And if not, we'll then return that capital. Now to jump to your next question, if something comes up inorganically, particularly around the Asset and Wealth Management business and our ability to expand that franchise or accelerate what we're trying to do in that franchise, we will consider it. But the bar to do something significant has to be very, very high. These things are difficult. They're disruptive and the bar has got to be very high. Are there small things that you can incrementally add, sure, and we'll think about that stuff. But to deploy a lot of capital into something significant, the bar would have to be very, very high.

The audience seems to favor the wealth management part over the asset management part of AWM. I'm not sure if you have a view.

I think there are interesting opportunities that allow us to accelerate things we do in both those spaces. It's interesting in the boutique investment bank. You know, boutique investment banking is about people. We have the most extraordinary talent in our investment bank, long-dated talent. There aren't a lot of people that leave our shop to do other things. If they're going to practice, they'd rather practice on our platform. And every few years, we go out and hire a handful of people that we think are the best people out there that don't work for us. And we're finding, generally speaking, when we go target people, we can find people to enhance that franchise. But our focus, if we were to think about things inorganically would be around Wealth and Asset Management.

I guess I wanted to follow up with something you said a second ago in terms of in the kind of maybe this new capital regime world to hopefully get to at some point next year or the year after, certain businesses may become more attractive that aren't as attractive now. Maybe you could just provide an example or two.

If you think about some of the lending activity that you do, there's lending activity that we turn away because it's not meeting our return expectations from a risk-reward perspective. And we're running a higher return firm that -- one of the things that, that does is it closes off certain activity. If you're running an 11% firm or a 10% firm, you can look through the lending edge in terms of where you're willing to deploy capital. There are some firms that run firms that those are their base returns. So their -- what their lends as to how they deploy capital is different. We're trying to run a mid-teens return firm. And so if we wind up with a lower fundamental capital level, there's some lending that we might have turned away that didn't look attractive that now looks more attractive. So that's one example.

Helpful. And then at your strategic update in January, you spent a lot more time on talking about expenses and efficiencies than I've kind of previously heard Goldman talk to. Maybe just talk to kind of what you're doing on that front and just how you -- the opportunity there.

Yes. Well, first of all, we don't always talk about it. But when you go back to our original Investor Day 6 years ago, besides growing the core business, besides the 4 growth areas we outlined, the third pillar was operate the firm more efficiently. And it's always been kind of core to who we are. And I mean, I know you've noticed this because we've talked about it, Jason. But when you look as we've grown the firm on non-comp operating expenses, we run a tight ship. And we're very, very focused and diligent about efficiencies and being -- we've got to invest in the business to try and operate as efficiently as possible. One of the things that we're excited about, which is leading us to talk about it more is we really see this AI technology is creating opportunities for us to fundamentally change processes inside the firm and make them much more efficient and therefore, free up resources to do other things that allow us to invest in more growth and productivity in the business. And so if you think about it, we spend a very significant amount on technology and engineers and engineering. I would want to spend more. I'm limited not by what we'd like to spend because we could grow and invest in the business, but I'm trying to balance returns, we're trying to balance returns, and so we're limited. If you can create operating efficiency and automation and free up excess capacity to invest more, you can accelerate some of the technology investment. And so that's one example of something we're very focused on. It's hard to change processes inside business, but you're going to hear us talk more and more about it because we think the productivity opportunities in professional services business with this technology. And it's not just to rip out cost, it's to redeploy into things that drive growth in addition to doing some things much more efficiently. We've got very detailed plans on a variety of areas where we think we can make good progress in really reimagining processes, creating automation, creating efficiency, looking through a different lens. And we're going to push the organization very, very hard. And that's going to create some movement of people, and it's going to create opportunities to kind of redeploy into things that can accelerate growth.

I guess you touched on AI. So maybe just expand on that a little bit. I mean I've seen headlines about your collaboration with Cognitive Labs -- Cognition Labs, your positive usage of Devin. Maybe just tell us more about the ability to leverage AI?

Yes. I mean those are 2 great examples. I mean, Devin is a great example. When I saw the first demonstration, I saw Devin, it did something in an hour that would take 10 engineers a few days. And so the power of that is really enormous. When you get it right, you can deploy it. But again, the lens has got to be -- these -- there are 2 things. You could put these tools. We have very productive people. You can put these tools in their hands and make them more productive. That's no different than what's been going on for 40 years. That's no different than when I started and I had to do a common stock comparison, I had to go to library and get microfiche and it took 6 hours. Today, you see it in your phone, you get it in 2 minutes. It doesn't mean we don't have -- we have a lot less smart people running around. It's just they're doing things that are more productive on the spectrum of productivity. Getting these tools into our very productive people's hands allows them to do more productive things that allow us to serve more clients and be better at what we do. That, I think, is easy for people to understand and easy for people to execute on. What's harder to really figure out is when you think about things like onboarding of clients, you think about things like the preparation of financials for all the entities that we have. When you think about how certain compliance functions and searching in the firm and knowledge works in the firm and how you distribute it, there are so many manual processes that exist in these institutions. How can you automate them, make them more efficient, get to what you really need. These tools are accelerating the ability to do that, and it requires focus, investment, leadership, and we're really focused on this in a very, very targeted way. And as we get comfortable with things that we're doing, we will talk more about it. But this has this organization's attention on steroids, and we're going to continue to find ways to operate the firm more efficiently and therefore, deploy into things that can grow the firm and keep the firm on a relative basis, just a little bit more competitive, a little bit more on edge in what it does.

And then a lot of talk about stablecoins. There was a release a couple of weeks ago about the tokenized money market fund in collaboration with BNY. Maybe talk a little bit more about what that means and just kind of the overall digital strategy.

Yes. I mean it's super interesting technology, super interesting. We're trying to tokenized money market funds as an example of our trying to take the technology and deploy it in a way that creates advantage for something that we're obviously a huge player in. Obviously, this bill that was passed is significant and moves us all forward. But the market structure bill still hasn't been passed. It's going to be a lot more complicated. There's going to be a lot of regulatory navigation around all this, and it's still early, but we're watching it very closely. Can it be a big opportunity? And will it create a disruption of where certain rents are collected in the financial ecosystem, particularly around things like payments and money movement, absolutely over time. Interestingly, I think those are things that we're less exposed to. But through this technology, it might be easier for us to have access to some of those rents in different ways. And so we're thinking about that, strategizing about it. There are a lot of people talking about it as though it's easy and it's going to be fast, it won't be. But it's certainly something that's interesting and has our attention.

We put the last ARS question. And there's also, I guess, the last question for this session, which I'm going to keep for myself. So I guess, David, you mentioned more durable revenues. You mentioned the constructive macro backdrop that feels like it has some legs to it. We talked about a likely new capital construct that allows you to kind of plan better with lower management buffers and maybe lower kind of overall requirement. I guess against that backdrop, I guess, how do we think about the forward trajectory of Goldman, return profile, the target? It sounds like maybe a better return profile today than when we had Investor Day a couple of years ago and...

So we've been talking about the fact that we really believed that we could drive sustainable mid-teens returns for the firm through the cycle. And we really haven't said anything different. We've been -- we're kind of getting there. But that was really driven through our ability to prove to the market, and I think we've now proved this, okay, that our Banking and Markets business is mid-teens, okay, through the cycle. You've got a number of years. Now could you create a year, okay, where it's not? Okay, Sure. I mean, of course, okay? But I think you've got a lot of data points now where our Banking and Markets business has delivered mid-teens returns. And we think we've got a pretty sustainable mid-teens ROE business, and we're going to work hard to protect that and invest in that. On Asset and Wealth Management, the returns are below our target, but they're moving up. And I've told you that I believe that we can do better than mid-teens in that business. And we think we've got a very high degree of confidence in our ability to execute on that in the coming midterm number of years. And if you think about that, that's the firm, okay? A Global Banking and Markets business that people have increasing confidence is mid-teens and an Asset and Wealth Management business that is not yet mid-teens, that should be higher than mid-teens. And that's what we're driving toward. And so when you put that together, you certainly get a mid-teens durable business. We have a very high degree of confidence that through the cycle, we can deliver on that for investors. And I think investors are getting more confidence in our ability to do that.

Perfect. On that note, please...

By the way, the bottom chart actually shows that people are -- 63% of the people think we'll achieve or exceed our targets. I mean that's pretty good. You get 2/3 kind of believing what we think we can do, and that's pretty good. I'll take that.

It supports the stock at an all-time high.

I'll take that.

On that note, please join me in thanking David for his time today.

Thank you very much.